Alpari
Alpari Representative
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US Opening Call from Alpari UK on 16 August 2013
Expectations too high ahead of consumer sentiment reading
Today’s US opening call provides an update on:
It’s been a relatively quiet morning so far in Europe, but things should pick up as we move into the US session with a number of key pieces of economic due to be released.
There’s been a lot of attention on the US this week, with economic data and comments from Fed members being picked apart ahead of the September meeting. The consensus in the markets now appears to be that the Fed will begin the first phase of its QE exit strategy at the September meeting, probably reducing its asset purchases to $60-65 billion a month, which is still a huge figure.
US Treasury yields rose to 2.8% on Thursday – the first time they have reached this level in two years – in response to the weekly jobless claims which fell to six year lows. The rise in yields coincided with a massive drop in US indices, with the Dow recording triple digit losses for the second consecutive session to end more than 200 points down on the day.
Clearly the shift of focus onto fundamentals during the corporate earnings season was only temporary and once again, the Fed dictates where the markets go. The only difference between now and before the corporate earnings season is that instead of looking for any excuse to go long, traders are going short at every opportunity, be it hawkish sounding comments from the Fed or good data.
There’s a few pieces of economic data due out this afternoon, which will be worth keeping an eye on. The UoM consumer confidence figure, as always, is extremely important given that consumer spending makes up around two thirds of US output.
Market expectations are currently for a slight improvement to 85.5 from 85.1 last month, but I struggle to see how we’re going to see this. Reports over the last month have suggested that consumers have felt the pinch as a result of higher fuel prices and mortgage rates, while consumer confidence in July unexpectedly fell further than expected.
On top of that, Wallmart disappointed yesterday when reporting second quarter earnings, with same store sales falling and sales expectations for the year as a whole being much lower than expected. All things considered, it seems very likely that the consumer sentiment figure today will fall significantly short of current expectations.
Also today we have the release of some July housing data. Housing starts and building permits are both expected higher in July, but again it will be interesting to see if falling demand due to higher mortgage rates has had an impact on these figures, like it has other housing figures recently.
Ahead of the open we expect to see the S&P up 2 points, the Dow up 3 points and the NASDAQ up 3 points.
Expectations too high ahead of consumer sentiment reading
Today’s US opening call provides an update on:
- Focus on US data and Fed comments;
- Traders seeking shorting opportunities as September meeting approaches;
- UoM consumer sentiment expectations too high;
- Housing data potentially impacted by higher mortgage rates.
It’s been a relatively quiet morning so far in Europe, but things should pick up as we move into the US session with a number of key pieces of economic due to be released.
There’s been a lot of attention on the US this week, with economic data and comments from Fed members being picked apart ahead of the September meeting. The consensus in the markets now appears to be that the Fed will begin the first phase of its QE exit strategy at the September meeting, probably reducing its asset purchases to $60-65 billion a month, which is still a huge figure.
US Treasury yields rose to 2.8% on Thursday – the first time they have reached this level in two years – in response to the weekly jobless claims which fell to six year lows. The rise in yields coincided with a massive drop in US indices, with the Dow recording triple digit losses for the second consecutive session to end more than 200 points down on the day.
Clearly the shift of focus onto fundamentals during the corporate earnings season was only temporary and once again, the Fed dictates where the markets go. The only difference between now and before the corporate earnings season is that instead of looking for any excuse to go long, traders are going short at every opportunity, be it hawkish sounding comments from the Fed or good data.
There’s a few pieces of economic data due out this afternoon, which will be worth keeping an eye on. The UoM consumer confidence figure, as always, is extremely important given that consumer spending makes up around two thirds of US output.
Market expectations are currently for a slight improvement to 85.5 from 85.1 last month, but I struggle to see how we’re going to see this. Reports over the last month have suggested that consumers have felt the pinch as a result of higher fuel prices and mortgage rates, while consumer confidence in July unexpectedly fell further than expected.
On top of that, Wallmart disappointed yesterday when reporting second quarter earnings, with same store sales falling and sales expectations for the year as a whole being much lower than expected. All things considered, it seems very likely that the consumer sentiment figure today will fall significantly short of current expectations.
Also today we have the release of some July housing data. Housing starts and building permits are both expected higher in July, but again it will be interesting to see if falling demand due to higher mortgage rates has had an impact on these figures, like it has other housing figures recently.
Ahead of the open we expect to see the S&P up 2 points, the Dow up 3 points and the NASDAQ up 3 points.
Read the full report at Alpari News Room